Markets Moving Again

It is gratifying that our recommended long-term buy and hold
strategy has paid excellent dividends over the past five months which is a
period that market timers refer to as the "sell in May and go away"
period.

Markets have continued a nice upward climb over the last
6 months, and many funds are now showing positive one year returns for the
first time in quite a while. One year returns to August 31st show
73% of funds have a positive one year return.

Many individuals were tempted to review their asset allocation, and
make their accounts more conservative a year ago when markets were testing
their bottoms. Most held on through the downturn, and have now been
rewarded. Traditionally, September and October have been difficult months for the
markets. (Although we suspect that traditional adage may also be turned
on its head this year.)

Yet, now may be the time to revaluate, and see if there are
some gains worth locking in. If you would like a review of your asset
allocation, or if your goals have been changing recently, please contact
us.

A Tax Efficient Balance

In the last month, Allan and I have met with many clients as part of
our ongoing account reviews, and one particular scenario has come up
several times.

It is a situation where a client has a balanced
registered portfolio (RSP
or RRIF), consisting of bonds and equities, and is also accumulating
savings in a taxable account. Clients may be taking advantage of
high daily interest savings like the Scotia
Money Master account, or investing in savings bonds, while they decide
what to do with money they are putting aside.

Unfortunately, the non-registered interest savings is taxed fully as
interest income, cutting returns in half. Then, inflation eats up
the other half. We have a better solution.

We have been recommending to clients that we sell the equities or funds
in their registered accounts, and then repurchase the same or similar
investments in their non-registered accounts, with the money that was
sitting in low interest investments. Then, we use the money from the
equities, to buy longer term higher rate bonds, in the registered account.

Graphically, it looks like this:
In the "Before" pie chart, left, 1/3 of the portfolio is
taxable interest savings. In the "After" pie chart,
below, we replaced the interest savings with higher rate bonds, and have included all the interest bearing investments in the sheltered registered
environment.

Importantly, the overall exposure to equities has not changed (1/3 of
the overall assets), but the equities are now held in an account where
they can generate tax efficient capital gains, or be part of a
systematic withdrawal plan.

We would be pleased to
review this process of essentially doubling the rate on a savings account,
and putting higher interest investments in a sheltered environment for
you.

For us, it is obviously gratifying if we can replace low interest
taxable investments with similarly guaranteed but higher rate investments,
without actually having to change a client's overall risk profile.

Due Diligence

Each month, we meet with several fund managers to review their
investment process and recent performance. Of the many manager
meetings we attended this month, the most relevant was that of Jeffrey
Moore, fixed income manager of Fidelity's Canadian Asset Allocation,
Balanced and Bond funds.

While some investors are reluctant to buy longer term bonds, fearing
rising interest rates, or a bond "bubble", Jeffrey
continues to maintain that longer term bonds should be a major part of
client portfolios, as he has in our past meetings. He points to the
fact that only once in the last 10 years has there been a negative 1
year return on bonds, and even that loss was recovered completely in 16
months.

Longer
term interest rates are actually not as low as they seem. Over the
last 5 years, 10 year rates have generally been over 5% and sometimes even
above 6%. Current rates are 5%, which is almost double short
term rates.

A strategy of laddering bonds, with various maturities remains a
cornerstone of a solid investment plan. ScotiaMcLeod has a new tool
that can graphically chart the amounts and maturity years in your
portfolio, and we'd be pleased to provide that information to you.

Scotia Ranked Best Online Banking/Brokerage Service

Scotiabank was recently ranked
#1 in Canada for our online services by Gomez Canada. One of the major features of
ScotiaOnline that was highlighted in the report was the single login to see both your investment brokerage
accounts, and all your banking information. The access to
Morningstar fund research and ScotiaCaptial stock research was a noted
benefit.

Not wanting to rest on our laurels, we recently launched
several
upgrades, providing even more services. If you
have not yet signed up for online access to your accounts, please
click here for more information.

Income Trusts Volatile - But CI Signature High Income
Increases Distributions

The news over the last few months has been mixed for
income trusts. A number of the more recent income trust securities
have had to cut or suspend their distributions due to changing business
conditions, and others have faced questions about accounting
irregularities. As is often the case, a few bad apples may seem to
spoil the whole bushel. Or perhaps, it demonstrates again the need
for diversification and professional management.

Even in these tougher times for income trusts, the CI
Signature High Income fund will be increasing its monthly
distribution amount. The fund is largely invested in income trusts
(but no single issuer is more than 3% of the portfolio) and currently 25%
of the portfolio is in bonds.

The performance of the fund means that its unit value
has risen, allowing CI to increase its distribution to maintain its yield.
Effective September 30, 2003, the monthly distribution of the fund will be
increasing to $0.070 per unit from $0.065 or annual yield of approximately 7%. For more information on this fund or how
best to invest in the income trust
or high
yield markets, please contact us.

Fund News

CI Acquires Synergy Funds

CI funds has purchased Synergy funds, and an integration
of the fund families will no doubt occur, however the Synergy name and
unique mandates of many of the Synergy funds will remain. For more
information please visit: http://www.cifunds.com/web/pdf/synergy_notice.pdf

AGF Asset Allocation Fund Changes

AGF has announced a proposed merger of the AGF
World Balanced Fund into the AGF American Tactical Asset Allocation Fund.
The fund will then be renamed back to the AGF World Balanced Fund. (Tax
Loss provisions favour this format, although curiously, the World balanced
fund will then assume the lower track record of the ATAA fund.) John
Arnold and Rory Flynn of AGF International Advisors will continue as
managers of the AGF World Balanced Fund have a great track record at
transitioning funds.

The AGF Canadian Tactical Asset Allocation fund will be renamed the Canadian
Real Value Balanced Fund. The fund will now be managed by Keith
Graham, one of the industry's most successful and reputable Canadian
equity managers. Keith joined AGF Sept. 3rd and will be building
AGF's new Canadian Value Platform. Keith had
previously managed balanced funds at AIM/Trimark.

A unitholder vote for approval of the changes will occur
on the 25th of September.

E&P Caps Balanced Fund

Elliott
& Page has announced the capping of the Advisor and F
Classes of the Elliott & Page Balanced Fund to new purchases.
Announcements about a future merger of the fund with another in the
Elliott & Page family are expected in the future.

Templeton Growth Returns to 4 Star Status

Templeton Growth Fund has returned to its former 4 star
status according to Bellcharts/Morningstar. While the fund under performed
in 2002, we are pleased that Templeton clients have been rewarded in the
last several months with significant out-performance of most of its peers
and the broader markets. We will continue to monitor this fund and
advise if any changes are recommended.

A site we have often recommended to clients,
Morningstar.ca, has a wealth of information. New this month on their
site is their Marginal
Tax Rate Calculator. Use it yourself, to see why holding
equities outside a registered environment is so much better than regular
interest bearing investments.

® Registered trademark of The Bank of Nova Scotia, used under licence. ™ Trademark of The Bank of Nova Scotia, used under licence. Scotia Wealth Management™ consists of a range of financial services provided by The Bank of Nova Scotia (Scotiabank®); The Bank of Nova Scotia Trust Company (Scotiatrust®); Private Investment Counsel, a service of 1832 Asset Management L.P.; 1832 Asset Management U.S. Inc.; Scotia Wealth Insurance Services Inc.; and ScotiaMcLeod®, a division of Scotia Capital Inc. ("SCI"). Wealth advisory and brokerage services are provided by ScotiaMcLeod, a division of SCI. Insurance services are provided by Scotia Wealth Insurance Services Inc., the insurance subsidiary of SCI. When discussing life insurance products, ScotiaMcLeod advisors are acting as Life Underwriters (Financial Security Advisors in Québec) representing Scotia Wealth Insurance Services Inc. SCI is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

The Spiess McGlade Team is a personal trade name of Carl Spiess and Allan McGlade.